Mangalore Chem. — Q1 FY26 earnings call

Mangalore Chemicals & Fertilizers Limited reported a robust Q1 FY26, with revenue from operations increasing by 6% year-on-year to ₹862 crores, up from ₹814 crores in Q1 FY25. This growth was supported by a 4% rise in total sales volume to 1.98 lakh metric tons. Profitability saw significant improvement, with EBITDA up 6% to ₹115 crores, PBT surging 22% to ₹83 crores, and PAT climbing 41% to ₹62 crores. The company attributed this strong performance to an early and abundant southwest monsoon, leading to a 6% increase in kharif crop sowing and favorable agricultural conditions.

The merger with Paradeep Phosphates Limited is progressing well and is in its concluding phase at the NCLT. Both companies have secured necessary approvals from shareholders and creditors. Final NCLT hearings are scheduled for August 12th for PPL and August 20th for MCFL, with management expressing confidence in the merger's transformative potential to create substantial synergies and solidify market standing. This strategic initiative is expected to enhance MCFL's long-term growth trajectory and market leadership.

MCFL is actively pursuing expansion in its non-urea segment, with plans to establish a new NPK plant with a capacity of 600,000 metric tons. The initial work for this project is nearing completion, and a proposal is expected to go to the board within one to two months, with an estimated completion timeline of about two years. Additionally, the company is exploring the possibility of setting up a phosphoric acid plant, contingent on securing adjacent land, to further integrate its operations and diversify its product portfolio.

The upcoming sulfuric acid plant, though experiencing a slight delay, is expected to be operational in H2 FY26. This plant will generate approximately 15-16 tons per hour of waste steam, which will be utilized in the ammonia-urea plant. This integration is projected to reduce the urea specific energy by about 0.25 giga calorie per ton, partially offsetting the impact of new, stricter urea energy norms expected after November 2025. The company plans an ammonia-urea plant shutdown in November/December for hook-up and critical vessel replacement.

The company highlighted a clear upward trend in international fertilizer prices, with DAP climbing to $815 per ton and Urea to $495 per metric ton. Management explained that global phosphatic fertilizer prices are driven by supply-demand dynamics and geopolitical factors, particularly China's reduced exports to India. India has proactively secured long-term DAP supply agreements with Saudi Arabia (almost 3 million tons/year for 5 years) and Morocco (about 2.5 lakh tons for this year). The CFO also clarified that EBITDA per ton for Urea was ₹6,000 and for N20 was ₹3,200 in Q1 FY26, noting complexities in quarter-on-quarter margin tracking due to timing difference^📎s in subsidy declarations.

The current Urea energy policy, which allowed recovery of gas conversion investments over five years, will conclude in November 2025. New energy norms are expected to come into effect, though the specific details are still awaiting notification from the Department of Fertilizers. Despite a government request against urea plant shutdowns, MCFL plans a necessary shutdown in November/December to replace a critical 22-23 year old vessel in the urea plant, assuring that annual production commitments of 4,40,000-4,50,000 metric tons will still be met.